Beaverton City Council approves spending $8.85 million to buy Coldwell Banker building at the Round

The Beaverton City Council on Tuesday approved spending $8.85 million to buy the Coldwell Banker building at the Round at Beaverton Central.

City officials said buying the 108,000-square-foot structure at 12725 S.W. Millikan Way, would stimulate long overdue redevelopment at the Round and eliminate rent on a heating and cooling plant inside the building. Previous owner LNR Property LLC in Miami Beach, Fla. bought the foreclosed building at an auction last September.

"This is a restart that has wallowed in the mire for so many years," Mayor Denny Doyle said Tuesday night.

The city will draw from the general fund's $15.3 million contingency account and a capital development fund to pay $8.65 million for the building and another $200,000 in estimated closing costs. The city has $6 million in pre-approved credit from KeyBank for potential future improvements at the Round and to repay $2.85 million to the contingency account.

City officials said they were getting a good deal for the building, which would cost $17 million to rebuild from the ground up, according to a study.

During the last decade, planned office buildings and a parking garage never materialized when developers defaulted and left the Round mostly vacant. Condominium lofts, a gym, a strip of first-floor restaurants and scattered offices are all that remain. City officials said the financial troubles occurred because the original development agreement tied developers' hands to strict building requirements.

Instead, the firm, operating as newly created Beaverton the Round Associates LLC, will only be required to upgrade parking on four vacant lots, until the market improves.

Todd Gooding, president of the firm, said he's laid groundwork for bringing on more tenants to the Round and the spot left empty by troubled restaurant chain Typhoon.

"We signed a letter of intent with another Thai restaurant to back-fill that space," Gooding said.

The firm expects to close its purchase by late March or early April. It has already paid $350,000 in non-refundable security deposits.

The firm has also agreed to pay the city about $990,000 still owed to the city from previous developers. That includes donating land to the city for a Rose Biggi Avenue extension to Westgate Drive, donating land near the Beaverton Creek for future restoration projects and buying one of two remaining slices of city-owned land. The city will then only own the central plaza and the Coldwell Banker building.

Doyle said he was confident in ScanlanKemperBard's ability to follow through.

"We've checked very carefully," Doyle said. "They've honored their commitments. The real key is they're local with a successful track record."

City officials said they bought the building, in part, to bail the city out of a $400,000 yearly lease on the 4,500-square-foot Beaverton Central Plant, which currently operates at only a third of its capacity. If the city had renewed its lease, it would have paid $13.3 million during the next 33 years, officials said.

City officials once said they never intended to acquire the plant, but in 2005 they saw it as a good investment after a PGE subsidiary failed to continue providing services. The city hoped the plant would generate money as more tenants filled the Round, but initially was in the red as the city went to court to settle delinquent payments.

Doyle, who was city councilor at the time, said the old lease "was sensible with the total build-out of the project."

"That didn't pan out, so now we're fixing it," he said.

The plant now makes slight profit every year. It made $92,000 in fiscal year 2010-11.

During a public forum last week, Beaverton resident Ramona Crocker said the city was digging deeper into a questionable project at the taxpayers' expense. City officials should disengage from the Round altogether, she said.

"We can see how it hasn't worked, and yet it hasn't dampened the city's enthusiasm for the Round," Crocker said. "Taxpayers should not be under this obligation."

Others, primarily business owners, said the city's purchase of the building is the key to a rebirth of the Round.

"Not only are you open for business, but you're willing to step forward where others haven't," said Mark Edlen, CEO of Gerding Edlen, a developer that has a five-year contract with the city. "If the city wasn't buying, SKB probably wouldn't be here."

Domonic Biggi, whose family runs Beaverton Foods and owns land next to the Round, said upgraded streets, parking lots and utilities could attract future investors to his family's properties.

Biggi said he now sees possibilities for new office and retail buildings and a utility line connection from his property to the Beaverton Central Plant.